Husband claimed exempt for last 3 months of year. W2 does not include exempted income. Do I add it when doing my taxes? I know it needs to be taxed.

[andrewcook989]

My husband claimed exempt because we was getting a lot of overtime, we needed the extra money.  It was from Oct thru Dec.  Well we knew we would have to pay the taxes come tax time.  But on his W2 the employer excluded the exempted income from box 1.  Do I just add it back in or do I have to use the number that is in box 1.  It is significantly less than box 3.

[xmasbaby0]

All of your husband's income would still have to listed in box 1 of his W-2, whether he had tax withheld or not.  If the employer did not include that income in box !, that is a mistake.  The only box that should be affected is box 2 swine your husband had less tax withheld.  Better check with the employer before you use that W-2 on your tax return.  For the future--do not ever claim to be "exempt" from taxes.  Change the number of allowances on your W-4 to reduce the amount of tax being withheld instead.

[andrewcook989]

That is exactly what I thought and they said no that the income is excluded because he claimed exempt. That did not sound right to me either. We will NEVER do this again. What should I do?

[xmasbaby0]

What?!  ALL of the income received in 2017 has to be reported to the IRS both by you and by the employer.  You cannot change what the W-2 says  to add that income, or your tax return will not match what the employer reported to the IRS for your husband's income.  Claiming "exempt" (which was a mistake) only would mean not withholding tax for that income---not that it was "tax free" income that does not have to be reported.  What does the employer say about how they will report the wages paid for those 3 months?

[andrewcook989]

I think that I will call them back and ask them to do a corrected W2 to include the earned income.  That only makes sense.  Maybe I should tell them that a tax advisor said that it had to be done this way.  This is not a small company and one would think that they would know that it all has to be included.

[xmasbaby0]

No kidding.  Just how was the employer going to account for the 3 months of wages paid to an employee on the employer's own tax return?

[andrewcook989]

They are saying they can't include it because he claimed exempt.  My daughter has done this before because she truly was exempt and the income was included in box 1.  Doesn't make sense.

[andrewcook989]

I want to do the right thing.

[xmasbaby0]

Someone in the employer's payroll dept. does not know what they are doing. Do they actually think "exempt" means you do not even have to report the income to the IRS?   Is there a supervisor you can speak to?  With the tax deadline looming you might have to file it using the W-2 you have and then amend when they sort out their own mistake and issue a corrected W-2.  Expect to owe taxes when you amend.

[andrewcook989]

Oh yes.  I expect it and I am ready for it now.  The payroll lady transferred me to whom I assume was a supervisor to explain.  The explaination still did not make sense.  I know it is taxable, so I guess I will just have to file with what I have and wait for the IRS to send me a notice.  I would like to just go ahead and do it correct the first time but I can't add the money to box 1 because I have to report what is reported on the W2.  Wow what a mess.  Anyway, thank you for your responses!

[xmasbaby0]

Wow--you must be frustrated dealing with fools.  Good luck.